Published by Arfaa Law Group
Medical malpractice claims may become part of a bankruptcy estate when the underlying injury occurred before the patient filed for bankruptcy. In a recent case, the court considered whether a bankruptcy trustee could continue a medical malpractice action that the patient had failed to disclose during her bankruptcy case. The court allowed the trustee to pursue the claim for the benefit of creditors. If you were harmed by negligent medical care, a Baltimore medical malpractice attorney can evaluate your legal options.
Factual Setting and Procedural History
Allegedly, a patient underwent a total hysterectomy at a Washington, D.C. hospital in July 2015. She later maintained that the procedure had been performed improperly and caused injuries. In February 2019, she sent the hospital the notice required before filing a medical malpractice action.
Reportedly, the patient filed for Chapter 7 bankruptcy in November 2019 and stated that she had no claims against third parties or rights to sue. About two weeks later, she filed a medical malpractice lawsuit against the hospital. She did not add the claim to her bankruptcy schedules before receiving a discharge in March 2020.
It is alleged that the hospital learned of the bankruptcy during discovery in March 2022. The patient then reopened the bankruptcy case and disclosed the malpractice action. A bankruptcy trustee was appointed to administer the claim as an asset of the estate.
It is reported that the hospital sought summary judgment, arguing that the patient should be judicially estopped from proceeding because her lawsuit conflicted with her bankruptcy disclosures. The trustee moved to substitute as the plaintiff. The trial court entered judgment for the hospital and treated the substitution request as moot. The patient and trustee appealed.
Medical Malpractice Claims in the Context of Bankruptcy Actions
On appeal, the court reversed. It explained that a legal claim based on events occurring before bankruptcy generally belongs to the bankruptcy estate. The trustee therefore became the real party in interest with authority to prosecute the malpractice action, even though the patient had initiated the lawsuit in her own name.
The court concluded that the trial court focused too narrowly on whether the patient should be barred by judicial estoppel. The trustee had not made the inconsistent bankruptcy statements and represented the interests of creditors who were also innocent of the nondisclosure. Preventing the trustee from proceeding would have deprived those creditors of a potential source of recovery while giving the hospital an unwarranted benefit.
The court also found the trustee’s substitution request timely. The trustee filed it 57 days after the appointment, once the bankruptcy estate regained control of the claim. The court directed that the trustee be substituted as plaintiff, dismissed the patient from the action, and returned the case to the trial court.
The ruling addressed who could pursue the lawsuit and did not determine whether the hospital committed malpractice. On remand, the trustee still had to prove the applicable standard of care, a breach, causation, and compensable harm.
Consult a Baltimore Medical Malpractice Attorney
If you were harmed by incompetent medical care, it is important to understand your rights and how other litigation may impact your potential claim. The Baltimore medical malpractice attorneys at Arfaa Law Group can inform you of your options and aid you in pursuing the best legal outcome possible. Call (410) 889-1850 or contact the firm online to discuss a potential claim.